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Gates: ”Every Company Must Have The Ability To Innovate

WASHINGTON – A US appeals court has overturned a ruling that software giant Microsoft must be broken up.

In a damning indictment of the trial judge, the court said the earlier ruling had been “tainted” by the judge’s actions and it rejected his conclusion that the software giant must be broken up.

However, it agreed in part with the lower court’s finding that Microsoft had engaged in illegal anti-competitive behaviour.

Microsoft chairman Bill Gates said he was “very pleased” with the appeal court’s decision which he said “lifts the cloud of break-up”.

Mr Gates told the BBC that Microsoft was interested in seeking an out of court settlement to the long-running dispute but would not apologise for its behaviour towards competitors.

“We think that litigation is expensive and distracting and, if possible, we would like to see if a settlement can be reached,” he said.

Analysts said the decision was a major victory for Microsoft and speculated a second break-up ruling was unlikely. The case will now be sent back to a lower court to be reconsidered by a different judge.

In a statement, the US Justice Department said it too was “pleased” with the appeals court, since it had agreed that Microsoft had acted as an illegal monopoly.

US attorney general John Ashcroft described the ruling as a “significant victory”.

Mr Gates said that while Microsoft was still reviewing the details of the court’s ruling, it was clear it “significantly narrows” the district court’s decision.

“It sets a much higher standard for these issues than the district court applied,” he said. Mr Gates said the past four years had been “challenging” but he was “incredibly optimistic” about Microsoft’s future.

The company would now take time to decide what further action needed to be taken on legal issues but the business would move ahead as planned. “We are moving ahead with Windows XP as a product that has the features that consumers want,” Mr Gates said.

“There’s nothing in today’s ruling that changes our plan for our future products, including Windows XP.”

News of the court ruling caused a surge in US stock markets. At the close, the Dow Jones industrial average was up 131 points at 10,566. The Nasdaq composite was up 51 points at 2,126.

Trading in Microsoft shares on the Nasdaq was halted after the court’s decision and resumed at about 1850 GMT, with dealers reporting heavy buying.

The shares closed at $72.71, up 2.21% on the day.

Microsoft Glance

  • Appeals court overturns Microsoft breakup order, saying trial judge’s statements to reporters “seriously tainted” the process.

  • Allegation that Microsoft attempted to monopolize the Web browser market is “no longer viable.”

  • Microsoft may be allowed to tie together two previously unrelated products, such as its Windows operating system and its Web browser, unless the government can show the action would “unreasonably restrain competition.”

  • Microsoft worked to maintain its operating system monopoly, the court found.

  • The now-reversed penalty would have split Microsoft into an operating system firm and another company for everything else it makes, potentially paralyzing the software maker.

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